The Spanish government plans high-level meetings next week with private sector executives and labour representatives after the country reported zero growth in the third quarter.

GDP has flatlined after seven quarters of continuous, if timid, growth, it emerged on Friday. This has been attributed to a 2 per cent increase in VAT and the end of the government's Plan 2000E, which funnelled money into public works schemes and the car industry.

The zero growth also explains the government's muted welcome to last week's 70,800 drop in jobless figures, the first since the recession began in 2007. Close analysis showed most of the new jobs, an estimated 90,300, were created in the public sector – the biggest single jump in government employees since records began in 2005. And unemployment in Spain, still stands at 19.79 per cent – nearly twice the EU average, and by far the worst in western Europe.

"The recovery hasn't happened yet," said Valeriano Gomez, the Labour Minister, "But it's getting closer." As next week's meetings will focus on retraining schemes for the unemployed, the government appears to be unwilling to gamble on a sudden upturn.